15-year mortgages becoming more popular with under 3% interest rates

More South Floridians are applying for 15-year fixed rate loans to shorten their time in paying the loan – and take advantage of historic under 3 percent loans, lenders say.

"People are seeing that 2.875 percent loan and figuring that may never come again," said Jim Flood, regional manager of Supreme Lending in Plantation.

"A lot of consumers are going for the 15-year loans, whether they are refinancing or purchasing a home," added Doug Leever, the mortgage sales manager for Miramar-based Tropical Financial Credit Union.

Some South Floridians want to pay off their loan earlier than the traditional 20- or 30-year mortgage, he said. To them, it's a bargain because of low interest rates that haven't been seen since secondary lender Freddie Mac began keeping records on the 15-year loans in 1991. The lowest rate was set three weeks ago when the average 15-year fixed rate fell to 2.8 percent.

Still, the 15-year fixed rate has not been rising as much as the 30-year fixed rate and is now almost three fourths of a point cheaper than this week's average 30-year rate of 3.62 percent, Freddie Mac reported. Average 15-year fixed rates have been below 3 percent for 12 weeks.

Consumers have responded by increasingly picking 15-year loans since late spring, according to statistics from the Mortgage Bankers Association.

Applications for 15-year fixed rate mortgage were up almost 30 percent in June from May and had almost doubled from a year earlier, the association data showed.

Homeowners were using the loans to pay down their debt faster, said association spokesman Matthew Robinson.

"With interest rates as low as they are, the monthly payment increase can be minimal," Robinson said.

It's becoming more attractive to South Floridians to pay down on their mortgages with home prices beginning to go up again, lender Flood said. "Fifteen-year mortgages look like a good investment, he added.

Job security is also factoring into South Floridians' interest in applying for the shorter loans, said Adam Cohn, a Boca Raton senior mortgage banker.

South Floridians are increasingly feeling more confident, with some getting raises, he said. More feel they can afford the 15-year loan and pay the higher payments, added Cohn.

"We are getting a lot more calls asking about the 15-year loans. It's becoming a more popular option," he said.

In Pembroke Pines, Todd Templin discovered that when he was among the first to refinance when mortgage rates started plummeting. He said he went from a 6 1/8 percent loan to 3.25 percent.